Mountaintop Mining Gets Heated

Ken Silverstein | Sep 27, 2010

The coal industry is the target of a lot of debris. While most of it is being tossed by environmental organizations, the rubble is now coming from the investment banking industry - those that finance the operations of coal mining companies.

At issue is mountaintop mining practices in Appalachia, which sheer off the tops of hillsides to get at the underlying coal seam. Besides the scarring of the landscape, the rock and dirt that is removed ends up in the streams below and affects local water quality. So, some of the big banks have limited their involvement with the coal companies.

It's all part of a greater push by the green groups to curb coal consumption in this country. The focus now is on the mountaintop mining practices in Kentucky, Tennessee and West Virginia - one that is supported in part by the current Environmental Protection Agency that has placed limits on the mining technique.

That movement is gaining strength now that Bank of America, Citi, Credit Suisse, JPMorgan Chase, Morgan Stanley and Wells Fargo have set formal policies that will minimize their relationships with coal operators performing mountaintop removal.

"Money talks - and it is saying loud and clear that mountaintop removal coal mining is a bad investment," says Rebecca Tarbotton, executive director of the Rainforest Network. "With the move away from mountaintop removal coal mining, our country's top banks are showing that they know they can do well while doing good for our environment and our public health."

The organization, which first approached Bank of America three years ago on this issue, says that banks are no longer financing Massey Energy, which is the biggest coal operator in Appalachia involved with mountaintop removal. Specifically, it says that JPMorgan Chase, Bank of America and Wells Fargo all underwrote bonds and provided loans for the company but they no longer do.

The banks are looking out for their bottom line, believing that eventually the United States will move toward carbon constraints and that such associations would not be productive. Some banks have already adopted "carbon principles" that they say are intended to limit their exposure industries with large carbon footprints.

But such a view may turn out to be sanctimonious and one that will cost them business as other financial institutions step in and take their business. Indeed, PNC and UBS are more than willing to bankroll such operations. While coal companies will have tighter regulatory controls, they will not disappear as too much of the national economy - not to mention local jobs in Appalachia - are dependent on their product.

Balancing Act

The coal industry, in fact, has already marched on Washington to illustrate the role it now plays and what it is doing to repair the land and water. Beyond the political steps, it is also in the process of suing to regain some earlier mountaintop mining rights that have been lost since an adverse April ruling by the EPA. At stake: Appalachia is responsible for a third of the nation's coal and two-thirds of those jobs, it says.

The Energy Information Administration estimates that coal reserves in Appalachia are 55.2 billion tons while coal production tied to mountaintop mining in West Virginia alone is 52 million tons annually, which is more than the production of underground mining operations.

"We plan to highlight the critically important role of the American coal miner and to call on lawmakers and administration officials to stop efforts to regulate the coal industry - and the thousands of jobs it provides - out of business," says Chris Hamilton, senior vice president of the West Virginia Coal Association. "West Virginia's congressional delegation understands the importance of coal to our local economies and national energy plan, but many federal legislators and bureaucrats do not."

Hamilton points to a recent study by the Senate Environment and Public Works Committee's Minority Staff that highlights the economic effect of the EPA's limits on coal mining permits in Central Appalachia. According to the study, nearly 18,000 new and existing jobs and more than 80 small businesses are being jeopardized. He says that about 190 permits are still awaiting action.

Mountaintop mining gained prevalence in the 1990s, largely because about 90 percent of the resources that lay beneath those peaks were available for production. After the area is mined for coal, it must be "reclaimed" and turned into something useful such as schools, shopping malls and recreational sites.

It's a lot more troublesome than that, say environmentalists and other critics. Roughly 6,700 permits were issued between 1985 and 2001 and all to unload debris from the mining process to the areas below. According to the Environmental Protection Agency, about 2,000 miles of streams have been buried while at least 380,000 acres of local forestry have been devastated.

"We will continue to work with all stakeholders to find a way forward that follows the science and the law," says Lisa Jackson, EPA Administrator. "Getting this right is important to Americans who rely on affordable coal to power homes and businesses, as well as coal communities that count on jobs and a livable environment, both during mining and after coal companies move to other sites."

Adding financial pressures to the current regulatory ones in effect will likely result in better mining practices - not an outright ban on mountaintop removal. In a country that is dependent on coal, that's acceptable.

So what do you think? Please share your thoughts by posting a quick comment below, or by sending me a longer reply to energybizinsider@energycentral.com.

Mountaintop Mining Gets Heated

Throwing Debris at the Coal Industry